Motor Dealerships South Africa: internal fraud and theft significant

A recent survey of internal fraud and theft taking place at South African motor dealer businesses shows that the incidence of criminal activity is significant, says Tania Barlow of Sewells Group South Africa.

‘Empirical evidence which emerged from our study in 2011 shows clearly that the losses involved are substantial. We also concluded that prevailing social and economic climate is quite likely to stimulate more opportunism in this regard.’

She urged dealer principals and retail automotive group managements to participate in a ‘Fraud and Theft Health Check’ being facilitated by Sewells Group, a leading specialist training and consulting company in the automotive retail sector.

‘The impact of internal fraud and theft on dealer profitability cannot be under estimated. We believe that tabling what we have established thus far will assist in identifying the frequency incidents, and give a pointer towards where one should be looking for problems.’

Last year Sewells Group had collected and collated data from participating dealers which showed that nearly three-quarters of the respondents had experienced fraud or theft and 77% had been victims more than once (Tables A & B). The nature of the incidents is described in table C where the theft of cash and non-cash assets (like parts) is the most prevalent.

‘Clearly this is a red flag indicator of risk and there is a need for preventive measures in these two areas.’

The highest frequency of fraud and theft occurs in the service and parts departments as is shown in table D. Table E shows the value of fraud and theft per incident and that more than 50% of the incidents have a value of less than R50 000.